9911796707
TMI Blog2015 (11) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... p first for disposal. Revenue has altogether taken seven grounds of which grounds 1, 6 and 7 are general needing no specific adjudication. 03. Vide its grounds 2 and 3, Revenue is aggrieved with the direction of CIT (A) for exclusion of M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd from the list of comparables selected by TPO for bench marking the value of international transactions of assessee with its AE. 04. Facts apropos are that assessee engaged in software development, messaging and marketing support activities, was rendering such services to its principal Electronics for Imaging Inc., USA. For justifying the revenue of Rs. 10,02,75,735/- it received on account of international transactions, it adopted cost plus m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not coincide with that of the assessee. As per CIT (A), the published accounts of these two companies were for year ending 30.06.2004 and hence could not be considered as proper comparables since assessee's financial year was ending on 31.03.2004. 07. Now before us, Ld. DR submitted that the two companies, namely, M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd, had appeared in assessee's own list in its TP study. Hence according to him, CIT (A) fell in error in directing exclusion of these companies. 08. Per contra, Ld. AR supported the order of CIT (A). 09. We have perused the orders and heard the rival contentions. There is no dispute that accounting period of M/s. Synergy Log-in Systems Ltd and M/s. Transworld Info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date, when compared to that of the assessee. We do not find any reason to interfere. Grounds 2 and 3 of the Revenue stand dismissed. 11. Vide its ground 4, grievance raised by the Revenue is that CIT (A) held foreign exchange loss / gain as operating in nature. 12. Ld. DR in support of the above ground submitted that CIT (A) had not established the nexus between the foreign exchange loss / gain with the export activity of the assessee. 13. Per contra, Ld. AR supported the order of CIT (A). 14. We have perused the orders and heard the rival contentions. Assessee's submission with regard to foreign exchange gain of Rs. 29,96,409/- which it considered to be operating in nature was as under : "82. It was submitted that while computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand adopted the turnover ratio as basis for allocation. Contention of the assessee was that its main assets were its employees and accounts were maintained on ERP, enabling it track all costs based on cost centres linked to each segment. Assessee submitted that man power was its most critical resource and therefore allocation on the basis of man-month was scientific and appropriate. Though the TPO was not appreciative of the above contentions, CIT (A) accepted it, considering the judgment of Hon'ble Delhi High Court in the case of CIT v. EHPT India P. Ltd [(2011) 16 taxmann.com 305]. 17. Now before us, Ld. DR submitted that allocation made by assessee had no scientific basis. According to him, cost could be better allocated on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment read as under : 8. We have examined the matter in the light of the submissions made before us. The fate of the appeals must depend upon the answer to the question whether the method adopted by the assessee, namely, that of apportioning the indirect expenses between the STP unit and the non-STP domestic unit on the basis of the "head-count" is an unreasonable method and if it has been followed consistently by the assessee in the past and has also been accepted by the department, should the revenue authorities be permitted to disturb the same in the years under appeal. It seems to us that the settled position in such matters is to examine whether the method which is canvassed for acceptance is the one (a) which has been consistentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. The working given by the appellant counsel has been found to be correct. In view of the above facts, as the assessee had shown more income though the right course of allocation for indirect expenses is turnover basis but as the appellant company had shown more income, the same is to be accepted and cannot be disturbed. In view of the above, no disturbance is required to be made in respect of indirect expenses allocated by the appellant company. In view of the above facts, the addition made by the Assessing Officer is deleted." It was only as a matter of principle that the CIT(A) upheld the method adopted by the Assessing Officer even though the result was in favour of the assessee. Neither the Assessing Officer nor the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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